Three important legislative changes take effect on 6 April 2014 that will impact employment litigation and dispute resolution strategy in the United Kingdom.
Multinational companies increasingly have internationally mobile employees (IMEs) who perform services in more than one country, other than their country of citizenship, during a single taxable year. It can be quite challenging to manage legal compliance and tax risks with a globally mobile workforce using a typical secondment arrangement. Under this arrangement, an IME is employed by the home country (usually the place of citizenship) employer and is then assigned or seconded to work in a host country. This approach can result in several entities within a multinational company’s controlled group having multiple assignment letters for each IME, without having any common administration.
A global employment company, or GEC, is an entity established by a multinational company to employ its IMEs. In effect, the GEC serves as a leasing company that is responsible for the employment, compensation and benefits, immigration and income and social tax matters for IMEs. The GEC provides the assignment letter to the IME, pays – or arranges with a third party to pay – compensation and benefits, and handles all required administrative support for the assignment. The GEC in turn charges a service fee to each entity that uses the IME’s services.
For more details about GECs, read the full article here.
If a German employee claims special payment for overtime he has performed, it is the employee who has the burden of proof regarding the following requirements:
In situations where there is a dispute regarding the payment of overtime, the second requirement is very difficult for the employee to prove. Nevertheless, in its decision dated 10 April 2013 – file number 5 AZR 122/12 – the German Federal Labor Court confirmed these legal principles, and strengthened the position of employers in disputed cases regarding employee overtime.
Where the disputed overtime was not expressly ordered by the employer, but was merely approved or tolerated by the employer, the German Federal Labor Court emphasized that the employee has to prove the employer’s knowledge of each single case of performed overtime and that the employer expressly or impliedly consented to it.
If the employee claims that the overtime order was given by way of implication, e.g., by assigning tasks that could not have been accomplished during regular working time, he has to prove that these tasks could not have been finished without working overtime.
Given these strict requirements and the modern working environment that generally does not have explicit or even written work orders, employees will likely have a very difficult time producing evidence to support a disputed overtime claim in Germany.
On December 24, 2013, the Departments of Labor, Health and Human Services, and the Treasury issued highly anticipated proposed regulations that would amend the definition of limited excepted benefits. Excepted benefits are generally exempt from the Patient Protection and Affordable Care Act’s (ACA) market reform requirements. The proposed rules would be effective for plan years beginning in 2015. While the proposed regulations provide guidelines on excepted benefits, employers should watch for the final rules to accurately design ACA-compliant excepted benefits plans. To get a better handle on how the proposed rules on excepted benefits impact employers, Wolters Kluwer of Employee Benefits Management Directions, spoke with Joanna C. Kerpen, partner in the employee benefits practice group at McDermott Will & Emery.
What Does This Mean for Employers?
The changes will take effect on 6 April 2014 and will be applicable to dismissals taking effect on or after that date.
It is important for employers to note that:
Employers’ exposure in the event of an unfair dismissal claim will rise and should therefore be factored into decision making regarding litigation or settlement strategies.
by Katie Clark and Richard Cook
2013 saw a raft of changes to UK employment law and there are likely to be more in 2014. In this Employment Alert, we recap some of the key changes that happened in 2013 and look ahead at what to expect in 2014.
To view the full article please click here
The Supreme Court of the United States recently heard arguments in its review of the U.S. Court of Appeals for the Sixth Circuit’s Quality Stores decision. At issue in Quality Stores is whether certain severance payments made to employees following an involuntary separation, but which are not linked to state unemployment benefits, are “wages” subject to Federal Insurance Contributions Act (FICA) tax. While the Supreme Court is reviewing the Quality Stores decision, there is an impending April 15, 2014, deadline for employers to file a protective refund claim for 2010 employment taxes for FICA taxes paid on severance payments.
Recent IRS guidance clarifies a number of outstanding questions regarding “in-plan conversions” of non-Roth balances to Roth balances in 401(k), 403(b) and governmental 457(b) plans. In particular, the guidance confirms that converted balances are subject to the same distribution restrictions after the conversion as they were prior to it.
A federal court recently declared unconstitutional Internal Revenue Code Section 107(2), which excludes from gross income a rental allowance paid to a “minister of the gospel” as part of his or her compensation, on the grounds that it violates the Establishment Clause of the U.S. Constitution. Religious institutions offering such allowances should closely monitor further developments in this area of the law and consider alternative compensation strategies if federal courts in their jurisdiction adopt similar holdings.
To read the full article, click here.
We reported in the autumn on some small but important changes to TUPE planned to take effect in early 2014. We promised to let you know if there was any delay in the proposed implementation date of 1 January 2014. The UK Government has now confirmed that the TUPE changes will in fact take effect from 31 January 2014.
What Are The Key Changes?
A summary of the key changes can be seen in our previous alert here.
What Does This Mean For Employers?
Employers will not be able to rely on any of the new provisions for TUPE transfers occurring before 31 January 2014.
Employers who were planning on undertaking a TUPE transfer on or shortly after 1 January 2014, with a view to relying on some or all of the new provisions, may now, if possible, wish to consider delaying that transfer until the changes take effect on 31 January 2014.
This consideration is particularly relevant for any employers who may be running simultaneous pre-transfer redundancy and TUPE consultations, together with those employers looking to relocate the transferring workforce to existing premises post-transfer.
For more information, or to discuss the impact of the changes to TUPE or the revised implementation date on your business, please contact Katie Clark or any other member of the McDermott employment team in London.
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